Independent Reviewer, Stephen Sedgwick AO, has today released an Issues Paper on Remuneration in Retail Banking.
The Issues Paper is part of an Independent Review commissioned by the Australian Bankers’ Association.
A copy of the Executive Summary is attached here. The full Paper is available here.
“This Paper is an important step in the process, and sets out key issues on which further information from the public will assist in completing the Review.” Mr Sedgwick said.
The Issues Paper outlines current pay practices in the retail banking sector for Tellers, Sellers and their supervisors and near managers as well as third parties and sets these arrangements in context.
An important element of that context is that some approaches to providing product-based incentives have been banned in the financial services sector because of the risk that they lead to poor outcomes for customers.
These prohibitions typically do not apply to those parts of retail banking covered by the Review.
Nonetheless, many banks have already begun to reduce reliance on product-based payments and to strengthen the checks and balances intended to reduce the risk of incentivising practices that could lead to poor customer outcomes for retail banking customers.
“I agree that these steps are in the right direction and encourage banks to continue along such a path.”
“I have also tentatively identified some practices of some banks, including some local management practices, that banks should review to reduce the risk of poor customer outcomes.”
“This would also help the banking industry to restore trust, an objective which a number of senior bankers have set for themselves.”
“I am seeking feedback from the public, consumer groups, the banking sector and other interested stakeholders on seven key issues to inform the next stage of the Review.”
“Public input on these issues is important and will assist me to fully test views received to date and develop findings and recommendations to assist banks further reform pay practices.
“It will also assist me to identify remuneration principles that can be applied not only to retail banking but across banks more broadly, as required by my Terms of Reference”.
“I would like to thank all who have made a submission to date and for the spirit with which banks and individuals have participated in consultations so far. I particularly thank staff who have shared their stories with us, a number of which are reflected in the report.”
Submissions on the Issues Paper are requested by 10 February 2017 and can be sent to firstname.lastname@example.org.
“I also invite interested parties to register your interest in participating in a further round of consultations in February. You can register your interest by emailing the Review at email@example.com”
“In addition to the submissions and further consultations, the Review will also be informed by the work I have commissioned examining remuneration structures in banks in the UK”